Kotak Mahindra’s stand-alone net up, consolidated takes a hit

Mumbai: Private sector Kotak Mahindra Bank Ltd’s fourth quarter profit rose 48% from a year earlier to Rs103 crore on a stand-alone basis as it earned higher interest income, but consolidated profit declined as its investment arm took a hit.

The bank’s revenue rose to Rs918.09 crore in the three months ended 31 March, from Rs803.02 crore, on a stand-alone basis.

The net interest margin, or the difference between what it earned on loans and paid for funds, widened to 6.3 percentage points from 5.6 percentage points a year ago. The share of low-cost current and savings accounts, as a percentage of total deposits, rose to 32%, from 26% a year ago.

Its capital adequacy ratio, a measure of financial strength expressed as ratio of capital to risk-weighted assets, rose to 22.8%, from 20.2%.

On a consolidated basis, the bank’s net profit fell 12.3% to Rs210.66 crore in the quarter, from Rs240.10 crore a year ago. The Sensex had ended virtually unchanged in the quarter ended 31 March although it has bounced back since.

The banking arm’s net non-performing assets (NPAs), as a percentage of net advances, rose to 1.26%, from 0.38% a year ago. The bank restructured Rs55.87 crore worth of loans, which managing director Uday Kotak said were made up of “viable” loans.

“We have not restructured loans that we thought will be bad debts going forward. That’s why our NPAs have risen to some extent,” he said.

“I think by restructuring loans en masse, banks are delaying the inevitable (a rise in NPAs). We are conscious of not doing that. We preferred to show higher NPAs this quarter,” Kotak told Mint.

Kotak expects the economy to grow 5-5.5% in the current year, with a recovery starting from the second half of the fiscal year.

The bank expects credit growth of 10-15% in the current fiscal year. Its credit card business incurred a loss of Rs69.80 crore in the year. Still, the lender aims to expand its credit card customer base, said Kotak.

Analysts said the results were positive, citing the low amount of restructured loans and high capital adequacy achieved.

“Overall it’s a good result, this is a good growth base for FY10 and FY11,” said Jaiprakash Toshniwal, an analyst at ULJK Securities Pvt. Ltd.